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In: Accounting

Problem 12-9A Condensed financial data of Whispering Winds Corp. follow. Whispering Winds Corp. Comparative Balance Sheets...

Problem 12-9A Condensed financial data of Whispering Winds Corp. follow.

Whispering Winds Corp.
Comparative Balance Sheets
December 31

Assets

2017

2016

Cash

$ 158,368

$ 94,864

Accounts receivable

172,088

74,480

Inventory

220,500

201,586

Prepaid expenses

55,664

50,960

Long-term investments

270,480

213,640

Plant assets

558,600

475,300

Accumulated depreciation

(98,000

)

(101,920

)

Total

$1,337,700

$1,008,910

Liabilities and Stockholders’ Equity

Accounts payable

$ 199,920

$ 131,908

Accrued expenses payable

32,340

41,160

Bonds payable

215,600

286,160

Common stock

431,200

343,000

Retained earnings

458,640

206,682

Total

$1,337,700

$1,008,910

Whispering Winds Corp.
Income Statement Data
For the Year Ended December 31, 2017

Sales revenue

$761,382

Less:

     Cost of goods sold

$265,502

     Operating expenses, excluding depreciation

24,324

     Depreciation expense

91,140

     Income tax expense

53,469

     Interest expense

9,271

     Loss on disposal of plant assets

14,700

458,406

Net income

$ 302,976


Additional information:

1.

New plant assets costing $196,000 were purchased for cash during the year.

2.

Old plant assets having an original cost of $112,700 and accumulated depreciation of $95,060 were sold for $2,940 cash.

3.

Bonds payable matured and were paid off at face value for cash.

4.

A cash dividend of $51,018 was declared and paid during the year.

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Solutions

Expert Solution

Answer-

WHISPERING WINDS CORP.
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER,2017
Particulars Amount
$
Cash flow from operating activities
Net Income 302976
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation 91140
Loss on sale of plant assets 14700
Change in operating assets & liabilities
Increase in accounts receivable -97608
Increase in inventory -18914
Increase in prepaid expenses -4704
Increase in accounts payable 68012
Decrease in accrued expenses payable -8820
Net cash flow from operating activities (a) 346782
Cash Flow from Investing activities
New plant assets purchased -196000
Long term investments purchased -56840
Plant assets sold 2940
Net cash Flow from Investing activities (b) -249900
Cash Flow from Financing activities
Cash dividends paid -51018
Common stock issued 88200
Bonds paid -70560
Net cash Flow from Financing activities (c) -33378
Net Change in cash c=a+b+c 63504
Beginning cash balance 94864
Closing cash balance 158368

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